U.S. states saw their tax revenue drop by about $31 billion, or 6 percent, from March through August, compared to the same period a year earlier, as the pandemic triggered economic shutdowns across the country, according to data from 44 states compiled by the Urban Institute.
The scale of the drop appears smaller than expected, relative to the depth of the economic contraction, and comes after several states have reported that their revenue didn’t decline as much as anticipated despite business shutdowns and increased unemployment. In August, when much of the country was reopening, state revenue climbed about 1.1 percent from a year earlier, the Urban Institute found.
Ori Faran is co-founder and CEO of Callvu. After serving as an engineer and professional services manager at Cosmocom and Enghouse Interactive, he founded Callvu in 2012 to help companies build easy-to-use digital experiences that automate customer service through seamless self-serve and agent-led interactions.
Lynn Gallin is the Vice President of Product Marketing at Rightworks, where she leads the strategy and execution of marketing initiatives to deliver innovative solutions for accounting professionals.
Prior to joining Rightworks, Lynn advised numerous leading companies on product strategy and managed extensive marketing research projects focused on branding, positioning, pricing, and communication effectiveness. She has over 20 years of experience in the B2B tech industry, including serving as Vice President of Corporate Partnership Marketing at Southern New Hampshire University in addition to marketing leadership positions at Skillsoft and Newforma. Lynn also successfully ran a market research consulting practice, advising high-tech companies like Microsoft, Yahoo!, and Autodesk.
Cindy Dash is the senior vice president and general manager for Broadridge's Retirement and Workplace division.
Prior to that she was the COO of Matrix, where she successfully led the integration into Broadridge. Prior to her role as COO of Matrix, Dash was general counsel for that firm for more than 10 years.
The tax figures come as Republicans in Washington balk at extending aid to states and cities to help cover budget deficits that are expected to continue as the coronavirus weighs on the economy. Experts say that states’ financial outlooks could worsen as the effects of the stimulus bill fade and high unemployment reduces tax bills next year.
The August increase should be viewed with caution since income-tax deadlines were pushed back to July, which could have resulted in some revenue being processed later, according to Lucy Dadayan, senior research associate with the Urban-Brookings Tax Policy Center at the Urban Institute. Personal income-tax collections, which rose 3.8 percent in August, were in some cases supported by backlogged unemployment insurance benefits subject to withholding tax, Dadayan said.
Between March and August, tax revenues fell 6.4 percent year over year, with 36 states reporting declines over that period, the report said. Between March and August, eight states, including Washington and Georgia, reported growth in tax revenue.
“Due to the shifting in timing of tax receipts this past year, it is crucial to view August year-over-year revenue gains and fiscal year to date data with caution,” Dadayan said in the report.